In his address to Congress on Tuesday, President Donald Trump repeated his commitment to making "child care accessible and affordable." It's a campaign commitment to help working parents that hasn't received much elaboration from Trump since the election. Ivanka Trump, the president’s eldest daughter, has met with members of the House and Senate, as Bloomberg News reported last week, to discuss her own proposal for a child-care tax benefit—and that sounds a lot like what Trump outlined during his campaign.
The available details have come under review by policy groups. The left-leaning Tax Policy Center analyzed the effects of a Trump child-care tax rebate and found that 70 percent of the savings go to people making more than $100,000. The Tax Foundation, a conservative-leaning group, also concluded that the plan would most benefit "relatively affluent, dual-income families," according to an interview with Bloomberg News.
"Everyone appreciates a tax cut. That is unquestioned," said Elaine Maag, one of the authors on the Tax Policy Center report. "Are you giving it to the people who are the most in need?" Here's a breakdown of who benefits from the Trump proposal.
$115 billion vs. $500 billion
The smaller number is how much the liberal Tax Policy Center estimates the tax cut will cost over a decade—considerably less than the $500 billion price tag estimated by the conservative Tax Foundation. The disparity comes from the fact that the Tax Foundation treats all parents as having the same costs, while the Tax Policy Center does not. "They gave everyone relatively high expenses rather than calculate expenses by age," said Maag. "In the real world, young children are very expensive for child care, and older school-age children tend to not have that high expenses."
"I think that's a realistic assumption, and I would make it too if I analyze the proposal again," said the Tax Foundation's Alan Cole. "However, there's just always going to be a large error bar in analyzing this policy until we see a longer, more detailed document than the one in the campaign. We're all just guessing a little." (The White House did not respond to questions about the child-care plan.)
$10
The average annual tax savings for those who make less than $30,000 a year. Trump's plan includes three main proposals: a tax deduction, a refundable credit, and a tax-free savings account. Low-income earners don't benefit much from the tax deduction, according to the Tax Policy Center, since they don't pay as much in taxes. "Low-income families will benefit not at all," said Maag. "High-income families have higher tax rates; when they avoid tax on income, it is more valuable."
$360
The average annual increase in after-tax income for earners making between $100,000 and $200,000. Those making between $50,000 and $200,000 see the biggest tax cut as a share of after-tax income, with those in higher tax brackets seeing the most savings. Those living in places with high costs of living and high salaries, such as San Francisco and New York, will feel these benefits the most. "There's very different child-care costs depending if you're in the Midwest or on the coasts," said Maag. "You will benefit more in these higher-income places because you have higher child-care costs."